Mobile, social disrupt financial sector

Mobile payments and social media are forcing banks to change business practices or die, financial officials and technology consultants said at a Sydney conference hosted by Asia-Pacific Banking + Finance.

All businesses “whose product or service can be digitized … are at risk,” said CSC Australia chief technology and innovation officer, Bob Hayward.

“Don’t do what Fairfax did five years ago [and] put your head in the sand and pretend this is not going to happen. “Because it is going to happen to all financial services firms.”

The Commonwealth Bank has been forced to “reposition” itself in light of consumers’ accelerating uptake of technology, said Andrew Murrell, CBA's general manager of channel marketing.

“We’re now living in a mobile and social world,” Murrell said. The mobile phone “is the device which people will interact with us the most on over the next six to 18 months.” Payments are a “battlefield,” he said.

“We certainly agree that if we do nothing we are at risk from being interrupted by other players in the field.”

Recognising that consumers have increasing choices, Credit Union Australia has upped its investment in technology, said CUA head of digital, Naina D’Souza. Social media plays a large part of its strategy, she said.

In Australia, the US and the UK this year, more people have made mobile payments than have written a check, Hayward said. Nearly all new smartphones will have near field communications (NFC) chips installed, allowing payment using apps like Google Wallet or Apple’s upcoming iWallet for iPhone 5, he said.

“Digital mobile payments is a confusing and fast-changing environment but it does seem to appear that in Australia, at least, emerging smartphones with NFC support will grow significant market traction in the next couple of years,” Hayward said.

“Our love affair with all smart devices, whether Apple or Android, will eventually see to that.”

An advantage to mobile payments is that “they have the potential to become the most secure form of money that we’ve ever had,” he said.

“NFC combined with pins and biometrics on these devices can be more secure than anything we’ve had before.”

Social media is also creating new opportunities for financial firms, Hayward said. It’s helped companies to sell traditionally unsexy services like life insurance, he said. Meanwhile, New Zealand bank ASB opened an entire branch based on Facebook “complete with tellers online,” he said.

As a relatively small company in the mutual sector, CUA has found social media to be a “great leveller,” D’Souza said. “It’s allowed us to punch above our weight.”

Social media “gives us the opportunity to get into customer mindsets,” D’Souza added. It’s also “given us the opportunity to humanise our institution.”

Firms who learn to mine big data will have an advantage, Hayward said. He predicted an “almost Orwellian scenario” where companies are “aggregating and analysing a mass of public, private, secure and open databases, including credit bureaus, DNA data banks, web logs, geospatial databases, social science, government databases, corporate databases, chat forums, surveillance videos [and] other sensors.”

Such data could be used for eliminating fraud and reducing customers’ premiums, said Hayward. “Despite the Big Brother overtones,” societal data mining could be a “positive tool in the hands of innovative and responsible firms."

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